![]() ![]() The authors argue that the trigger should be changes in unemployment rather than changes in output, and the design of semiautomatic stabilizers, whether they focus on mechanisms that rely primarily on income or on intertemporal substitution effects (changing the timing of consumption), depends crucially on the design of discretionary policy. Unlike purely automatic stabilizers (mechanisms built into government budgets that automatically-without discretionary government action or explicit triggers-increase spending or decrease taxes when the economy slows or enters a recession), semiautomatic stabilizers are targeted tax or spending measures that are triggered if, say, the output growth rate declines or the unemployment rate increases beyond a specified threshold. Blanchard and Summers argue for the introduction of what they call “semiautomatic” stabilizers. ![]() Fiscal policy will have to play a major and likely dominant role in stimulating the economy, requiring policymakers to fundamentally reconsider fiscal policy. President Obama described the measure as only the beginning of what the federal government ultimately would do to right the economy. ![]() With interest rates persistently low or even negative in advanced countries, policymakers have barely any room to ease monetary policy when the next recession hits. Shaken by the severity of the recession that began in December 2007, Congress passed a huge 787 billion stimulus package in February 2009. Taubman Center for State and Local Government.Shorenstein Center on Media, Politics and Public Policy.Mossavar-Rahmani Center for Business and Government.Malcolm Wiener Center for Social Policy.Belfer Center for Science and International Affairs.Ash Center for Democratic Governance and Innovation. ![]()
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